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Credit Cards for China

Credit card companies have their eyes on a big and fast-growing new market.

If you think about credit cards in America and you envision card companies such as MBNA(NYSE:KRB), Citigroup(NYSE:C), Capital One Financial(NYSE:COF), and HSBC(NYSE:HBC) subsidiary Household International, you may assume that they're not likely to be able to grow very fast. After all, most American households already have several cards, not to mention thousands of dollars of debt -- and, sadly, often tens of thousands of dollars of debt.

But cast your glance a little farther away and you may spot some rich opportunities for growth. At one end of the wealth spectrum are nations like ours, and at the other end, as our Foolanthropic charities have pointed out, billions live on less than $2 per day (40% of humanity does, in fact). (It's not too late to contribute to one of the impressive charitable organizations we support -- click over and learn about them.) In the middle are hundreds of millions of people around the world who walk around and buy lots of things without the help of plastic cards. But that may change soon.

American Express(NYSE:AXP) recently announced a deal with the Shanghai Pudong Development Bank through which it will make credit cards available to Chinese consumers. According to a McKinsey report, of the 1.3 billion people in China, barely 1 million have credit cards. American Express's venture aims to have some 4 million cards in circulation in China within a decade, as it targets the relatively affluent middle class. Citigroup has inked a similar deal, also focusing on China.

An American Express executive noted that credit cards in China have been doubling in number in recent years. That pace can't be sustained forever, but even a few years of 100% growth can generate some solid income for card issuers. (Perhaps, soon, millions of Chinese will be filling their wallets with spiffy Motley Fool Visa cards?)

Let's just hope that the Chinese don't fall prey to the dark side of credit cards, as so many Americans have done -- winding up mired in very-hard-to-dig-out-from debt. If you or anyone you care about is struggling with credit card debt, head to our Credit Center, which features tips on getting out of debt (including a free online seminar), along with guidance on how to manage your credit effectively.

Our Credit Card discussion board is also a happening place, where you might find yourself inspired byFools relating how they've paid off thousands in debts.

LongtimeFoolcontributorSelena Maranjiandoes not own shares of any companies mentioned in this article.

Author

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter... Follow @SelenaMaranjian